BILL ANALYSIS Ķ
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SB 9 Hearing Date: 4/28/2015
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|Author: |Beall |
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|Version: |4/15/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Eric Thronson |
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SUBJECT: Greenhouse Gas Reduction Fund: Transit and Intercity
Rail Capital Program
DIGEST: This bill makes a number of significant changes to the
Transit and Intercity Rail Capital Program, including recasting
the program's mission to fund large, transformative projects and
restricting 90% of the funding to projects with a total cost of
$100 million or more.
ANALYSIS:
The Legislature enacted AB 32 (Nuņez, Chapter 488), the Global
Warming Act of 2006, which requires the California Air Resources
Board (ARB) to establish a statewide greenhouse gas (GHG)
emissions limit such that by 2020 California reduces its GHG
emissions to the level they were in 1990. The Cap-and-Trade
Program is one of ARB's key AB 32 implementation programs.
Under this program, ARB establishes an overall limit - or "cap"
- on GHG emissions from specified industries. As part of the
Cap-and-Trade Program, ARB auctions off GHG emission allowances
as mitigation fees. To date, ARB has completed 10 auctions,
taking in a total of $1.6 billion in proceeds. These funds may
only be used to facilitate the achievement of GHG emission
reductions in California consistent with AB 32.
In 2014, the Legislature enacted SB 862 (Committee on Budget and
Fiscal Review, Chapter 36), a budget trailer bill which
establishes a long-term cap-and-trade expenditure plan by
continuously appropriating portions of the funds for designated
SB 9 (Beall) Page 2 of ?
programs or purposes. One of these programs is the Transit and
Intercity Rail Capital Program (TIRCP), to which SB 862 commits
10% of the annual cap-and-trade revenues.
Existing law specifies that the TIRCP fund both capital
improvements and operational investments in order to modernize
California's intercity, commuter, and urban rail systems as well
as achieve the following specific policy goals:
1)Reduce GHG emissions
2)Expand and improve rail service to increase ridership
3)Integrate various rail operators' systems, including
high-speed rail
4)Improve rail safety
Existing law appropriates the funds to the California
Transportation Agency, and assigns the Transportation Agency
with the responsibility of evaluating funding applications and
adopting a list of projects. Prior to commencing the program,
the Transportation Agency is required to develop draft program
guidelines containing selection criteria. Finally, existing law
requires the California Transportation Commission (CTC) to award
grants pursuant to the list of projects chosen by the
Transportation Agency.
In evaluating project applications, SB 862 requires the
Transportation Agency to consider:
1)Specified cobenefits, including:
Reduction of auto vehicle miles traveled
Promotion of housing development near rail stations
Expansion of existing rail and transit systems
Implementation of clean-vehicle technology
Promotion of active transportation
Improvements to public health
1)Whether the project was developed through the collaboration of
two or more rail operators
2)Geographic equity
3)Consistency with the adopted sustainable communities
strategies and the recommendations of regional agencies
Finally, existing law establishes a programmatic goal for the
SB 9 (Beall) Page 3 of ?
TIRCP to provide at least 25% of available funding to projects
that provide a direct, meaningful, and assured benefit to
disadvantaged communities.
This bill makes a number of significant changes to the TIRCP,
including:
1)Recasting the TIRCP mission to focus on large, transformative
capital improvements and eliminating operations funding as an
eligible use of the funds.
2)Specifying that the Transportation Agency dedicate 90% of the
funds to projects with a total cost of $100 million or more,
and 10% to projects costing less than $100 million.
3)Adding evaluation criteria, including:
Reducing the number of auto trips
Enhancing connectivity and coordination of all transit
in a region
Providing direct connectivity to the proposed high-speed
rail system
The extent to which a project reduces GHG emissions
The extent to which a project leverages other sources of
funding
1)Creating a process by which the Transportation Agency adopts a
five-year estimate of available revenues for the TIRCP and an
accompanying program of projects.
2)Enabling the Transportation Agency to enter into multi-year
funding agreements with eligible applicants.
3)Expanding eligible applicants from only rail-system operators
to include bus systems as well.
4)Setting up a process by which a grant recipient can receive
what is called a Letter of No Prejudice (LONP) from the
Transportation Agency, which enables the recipient to spend
alternative funds on a project with the promise of future
reimbursement from cap-and-trade revenues.
COMMENTS:
1)Purpose. According to the author, the Legislature created the
TIRCP within the cap-and-trade framework to fund transit
SB 9 (Beall) Page 4 of ?
projects, which are critical to reaching California's
environmental and economic goals for the future.
The author contends that large-scale transit expansion
projects would result in the "biggest bang for the buck" when
it comes to reducing GHG emissions because they add
significant capacity to existing public transit systems
operating in heavily congested, urbanized areas with high
concentrations of pollutants. This additional transit
capacity is essential to accommodate substantial ridership
growth that would result in a shift from solo driving to
public transit. The author believes this mode shift needs to
occur in order to reduce vehicle miles traveled and, thus, GHG
emissions.
Proponents of the bill argue, however, that the TIRCP is not
structured in a way that would allow it to accommodate
large-scale transit expansion projects that need a more
sizable amount of cap-and-trade dollars in order to be built.
This bill seeks to address this issue by incorporating into
the TIRCP a number of concepts that have been successfully
used for other state and federal transportation funding
programs that have the ability to allocate resources to
large-scale projects, such as the state Traffic Congestion
Relief Program, the State Transportation Improvement Program,
and the federal New Starts Program.
2)Existing TIRCP guidelines. As previously stated, SB 862
requires the Transportation Agency, through a public process,
to develop guidelines for the TIRCP before soliciting
applications for funding. These guidelines were released
February 6, 2015. The Transportation Agency is now in the
process of evaluating applications and awarding grants to
applicants for the 2015-16 fiscal year.
The adopted guidelines state that the Transportation Agency
"intends to fund a small number of transformational projects
that improve the statewide transportation network." The
guidelines also state, however, that no single project may
exceed 33% of available funds in any given year. For the
upcoming fiscal year, in which $25 million is available for
the TIRCP, that would mean the Transportation Agency will make
no award more than $8.3 million. It is unclear how such a
small amount of money can contribute much to a
transformational project. In future years, if the
SB 9 (Beall) Page 5 of ?
Transportation Agency retains its 33% restriction and the
available funding increases as expected, grants may grow to
roughly $60-70 million. Even that much, however, in one year
may not be enough to make a significant contribution to a
truly transformational project.
3)Problems this bill tries to address. One problem with the
existing TIRCP guidelines is that large, transformative
projects which this program is trying to target are likely to
cost billions of dollars and take years, even decades, to
complete. A one-time influx of money may be helpful, but the
nature of these long-term projects requires a long-term
commitment in order to ensure completion of the project (and
the requisite GHG emission reduction). This bill sets in
place a system in which the Transportation Agency can make a
multi-year commitment to a project and therefore have an
impact in the type of project the Transportation Agency
envisions funding.
In addition, the existing guidelines state that the extent to
which these funds would be used to leverage funding from other
sources will be considered in the evaluation process. Larger
projects tend to leverage the most state and federal funds,
but those funding programs typically require all funding to be
identified before awarding grants. This bill enables projects
to qualify for various funding streams through the multi-year
commitment process as well as the LONP option.
Finally, this bill seeks to resolve a few apparent oversights
in SB 862. First, existing law is ambiguous about what phases
of project development are eligible for funding, although the
TIRCP guidelines state that phases other than construction or
implementation are eligible. This bill clarifies existing law
to state that all phases of project development are eligible
for funding. Second, this bill inserts into existing law an
obvious requirement laid out in the TIRCP guidelines:
applicants should identify the funding sources and approach to
ensure ongoing operation of any new transit service created
through this program. Finally, while the TIRCP guidelines
state that bus rapid transit projects are eligible for
funding, existing law clearly alludes to rail projects as the
focus of the program. This bill clarifies that bus systems
are eligible recipients. The committee may wish to consider
amending the bill to not only include bus systems, but ferries
as well.
SB 9 (Beall) Page 6 of ?
4)Who should administer the TIRCP? As stated previously,
existing law assigns the Transportation Agency the
responsibility of adopting guidelines and administering the
TIRCP. The TIRCP created in existing law resembles to some
degree the Active Transportation Program in which the CTC
awards annual grants to applicants for active transportation
projects. As envisioned in this bill, the TIRCP would
resemble a state program like the STIP, which is a multi-year
schedule of primarily road and highway expansion projects. In
both of these instances, the CTC develops and adopts the
guidelines, administers the programs, and oversees the
distribution of the funds. In fact, CTC is the agency
responsible for all such transportation programs. It is
unclear why the Transportation Agency has hired staff and
developed expertise to administer the TIRCP and other similar
transportation programs when the CTC already has the expertise
and agency structure to do this work.
5)Opposition. TransForm, an organization dedicated to
sustainable and equitable transportation and land-use
policies, opposes this bill because they fear the changes this
bill makes to the TIRCP will eliminate from eligibility many
projects within disadvantaged communities that might otherwise
qualify for funding. As noted previously, existing law
requires that at least 25% of available funding for the TIRCP
must benefit disadvantaged communities. Supporters of this
bill point out that this bill does not change the existing
requirement and, therefore, the Transportation Agency must be
able to demonstrate that the selected TIRCP projects provides
benefits to disadvantaged communities. In fact, the TIRCP
guidelines note, "The highest rated applications that meet the
program objectives will be selected for programming, except
that the Transportation Agency may make adjustments to meet
the disadvantaged community goals of this program and provide
geographic equity."
Related Legislation:
SB 862 (Committee on Budget and Fiscal Review, 2014) -
established a long-term cap-and-trade expenditure plan by
continuously appropriating portions of the funds for designated
programs or purposes.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
SB 9 (Beall) Page 7 of ?
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
April 22, 2015.)
SUPPORT:
City of San Jose
Northern California Carpenters Regional Council
Santa Clara Valley Transportation Authority
Silicon Valley Leadership Group
OPPOSITION:
TransForm
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